SSRN Author: Bernard S. BlackBernard S. Black SSRN Contenthttp://www.ssrn.com/author=16042
http://www.ssrn.com/rss/en-usTue, 21 Jul 2015 01:24:24 GMTeditor@ssrn.com (Editor)Tue, 21 Jul 2015 01:24:24 GMTwebmaster@ssrn.com (WebMaster)SSRN RSS Generator 1.0New: Does Medical Malpractice Reform Increase Physician Supply? Evidence from the Third Reform WaveNine states adopted caps on non-economic damages during the third medical malpractice (“med mal”) reform wave” from 2002-2005, joining twenty-two other states with caps on non-economic or total damages. We study here the effects of these reforms on physician supply. Across a variety of difference-in-differences (DiD), triple differences, and synthetic control methods, we find no evidence that cap adoption predicts an increase in total patient care physicians, in specialties that face high med mal risk (except plastic surgeons), or in rural physicians. Consistent with this analysis, we also find no association between med mal claim rates and physician supply in state and county fixed effects regressions over 1995-2011. We reconcile our results to two prior papers that find evidence of an increase in physicians in high-risk specialties. http://www.ssrn.com/abstract=2470370
http://www.ssrn.com/1413378.htmlMon, 20 Jul 2015 05:41:46 GMTREVISION: Insurance Crisis or Liability Crisis? Medical Malpractice Claiming in Illinois, 1980-2010Using a previously unavailable database of closed medical malpractice (“med mal”) claims, maintained by the Illinois Department of Insurance, we analyze statewide trends in med mal claiming from 1980-2010, covering all three crises. The other available med mal datasets do not cover the 1980s. Since 1980, Illinois has experienced three med mal insurance crises – in the mid-1980s, mid-1990s, and early-2000s. Each time, Illinois responded by enacting tort reform. Paid claim rates rose sharply from 1980-1985, roughly leveled off from 1986-1993, and then experienced a sustained decline. By 2010, paid claims rates were 75% lower than in the peak year (1991). Thus, of the three insurance crises, only the first coincided with a major change in claiming. We find that payout per claim has steadily increased since 1980, but these increases are entirely explained by the virtual disappearance of smaller paid claims involving less severe injuries. http://www.ssrn.com/abstract=2462942
http://www.ssrn.com/1411132.htmlFri, 10 Jul 2015 21:19:27 GMTREVISION: Which Aspects of Corporate Governance Matter in Emerging Markets: Evidence from Brazil, India, Korea, and TurkeyThere is evidence that a broad measure of corporate governance predicts higher firm values in emerging markets, but little evidence on which specific aspects of governance drive that overall relationship. We study that question by asking which aspects of corporate governance consistently predict firm market value across four major emerging markets (Brazil, India, Korea, and Turkey), using a unique dataset that lets us build country-specific indices in each country for disclosure, board structure, ownership structure, shareholder rights, board procedure, and control of related party transactions. We find that disclosure predicts higher market value in each country (within disclosure, the principal predictor is financial disclosure); board structure has a positive coefficient in all countries and is significant in Brazil and Korea (within board structure, the principal predictor is board independence); and that once one controls for disclosure and board structure, the other indices ... http://www.ssrn.com/abstract=2601107
http://www.ssrn.com/1410967.htmlFri, 10 Jul 2015 11:44:00 GMTREVISION: The Trouble with Instruments: Re-Examining Shock-Based IV DesignsCredible causal inference in accounting and finance research often comes from “natural” experiments. These natural experiments generate “shocks” which can be exploited using various research designs, including difference-in-differences (DiD), instrumental variables based on the shock (shock based IV), and regression discontinuity (RD). There is much to be said for shock-based designs. Moreover, if one must use IV, shock-based IV designs are highly likely to be preferred to non-shock IV designs. But shock-based IV remains problematic. Often, a near-equivalent DiD design is available, and is usually preferable. We illustrate the problems with shock-based IV by re-analyzing three recent, high-quality papers. None of the IVs in these papers turn out to be valid. For Desai and Dharmapala’s (REStat 2009) study of the interaction between tax shelter opportunities and corporate governance, their first stage fails when we impose a balanced sample of firms with data both before and ... http://www.ssrn.com/abstract=2417689
http://www.ssrn.com/1410966.htmlFri, 10 Jul 2015 11:41:43 GMTREVISION: Does Tort Reform Affect Physician Supply? Evidence from TexasDoes state tort reform affect physician supply? Tort reformers certainly believe so. Before Texas adopted tort reform in 2003, proponents claimed that physicians were deserting Texas in droves. After tort reform was enacted, proponents claimed there had been a dramatic increase in physicians moving to Texas due to the improved liability climate. We find no evidence to support either claim. Physician supply was not measurably stunted prior to reform, and it did not measurably improve after reform. This is true for all patient care physicians in Texas, high-malpractice-risk specialties, primary care physicians, and rural physicians. http://www.ssrn.com/abstract=2047433
http://www.ssrn.com/1398861.htmlSat, 23 May 2015 04:31:18 GMTREVISION: Three-Party Settlement Bargaining with Insurer Duty to Settle: Structural Model and Evidence from Malpractice ClaimsPrior efforts to specify and then empirically estimate structural models of the outcomes of tort lawsuits involve only two parties – plaintiff and defendant. We incorporate the defendant’s insurer and its “duty to settle” into a settlement model. In medical malpractice cases, there is both anecdotal and quantitative evidence that policy limits and the insurer’s duty to settle are central parts of settlement bargaining. We estimate the model using a Texas database of closed, paid claims. Both the data and our model predict a mass of cases with a settlement offer by the plaintiff exactly at limits; a smaller but still sizeable mass of cases with payout exactly at limits (both before and after trial), and substantial haircuts (payout < damages) in tried cases with damages > limits. In counterfactual analysis, we predict that, as duty-to-settle liability becomes stricter, there will be: more at-limits offers, fewer trials, fewer at-limits payments in tried cases, more insurer ... http://www.ssrn.com/abstract=1884744
http://www.ssrn.com/1398475.htmlThu, 21 May 2015 13:59:48 GMTREVISION: Which Aspects of Corporate Governance Matter in Emerging Markets: Evidence from Brazil, India, Korea, and TurkeyThere is evidence that a broad measure of corporate governance predicts higher firm values in emerging markets, but little evidence on which specific aspects of governance drive that overall relationship. We study that question by asking which aspects of corporate governance consistently predict firm market value across four major emerging markets (Brazil, India, Korea, and Turkey), using a unique dataset that lets us build country-specific indices in each country for disclosure, board structure, ownership structure, shareholder rights, board procedure, and control of related party transactions. We find that disclosure predicts higher market value in each country (within disclosure, the principal predictor is financial disclosure); board structure has a positive coefficient in all countries and is significant in Brazil and Korea (within board structure, the principal predictor is board independence); and that once one controls for disclosure and board structure, the other indices ... http://www.ssrn.com/abstract=2601107
http://www.ssrn.com/1393958.htmlSat, 02 May 2015 12:20:49 GMTREVISION: The Deterrent Effect of Tort Law: Evidence from Medical Malpractice ReformA principal goal of tort law is to deter negligent behavior, but there is little empirical evidence on whether it does so. We study that question for medical malpractice liability, where prior studies have found weak, often null results. We examine whether state adoption of caps on non-economic damages – a central legal reform that reduces liability risk for providers – affects in-hospital patient safety. We use Patient Safety Indicators (PSIs) – measures of adverse events developed by the Agency for Healthcare Research and Quality – as proxies for overall safety. In difference-in-differences analyses of five states that adopt caps on non-economic damages during 2003-2005, we find strong evidence that patient safety gradually falls after the reforms, relative to control states. We also innovate in methodology, using a new, randomization inference-based approach to assess the statistical reliability of our results. http://www.ssrn.com/abstract=2161362
http://www.ssrn.com/1393955.htmlSat, 02 May 2015 12:17:35 GMTREVISION: The Trouble with Instruments: Re-Examining Shock-Based IV DesignsCredible causal inference in accounting and finance research often comes from “natural” experiments. These natural experiments generate “shocks” which can be exploited using various research designs, including difference-in-differences (DiD), instrumental variables based on the shock (shock based IV), and regression discontinuity (RD). There is much to be said for shock-based designs. Moreover, if one must use IV, shock-based IV designs are highly likely to be preferred to non-shock IV designs. But shock-based IV remains problematic. Often, a near-equivalent DiD design is available, and is usually preferable. We illustrate the problems with shock-based IV by re-analyzing three recent, high-quality papers. None of the IVs in these papers turn out to be valid. For Desai and Dharmapala’s (REStat 2009) study of the interaction between tax shelter opportunities and corporate governance, their first stage fails when we impose a balanced sample of firms with data both before and ... http://www.ssrn.com/abstract=2417689
http://www.ssrn.com/1392444.htmlSun, 26 Apr 2015 06:46:36 GMTREVISION: Shock-Based Causal Inference in Corporate Finance and Accounting ResearchWe study shock-based methods for credible causal inference in corporate finance research. We focus on corporate governance research, survey 13,461 papers published between 2001 and 2011 in 22 major accounting, economics, finance, law, and management journals; and identify 863 empirical studies in which corporate governance is associated with firm value or other characteristics. We classify the methods used in these studies and assess whether they support a causal link between corporate governance and firm value or another outcome. Only a small minority have convincing causal inference strategies. The convincing strategies largely rely on external shocks – usually from legal rules – to generate natural experiments. We examine the 75 shock-based papers and provide a guide to shock-based research design, which stresses the common features across different designs and the value of using combined designs. http://www.ssrn.com/abstract=1718555
http://www.ssrn.com/1387911.htmlTue, 07 Apr 2015 14:20:56 GMTREVISION: Shock-Based Causal Inference in Corporate Finance and Accounting ResearchWe study shock-based methods for credible causal inference in corporate finance research. We focus on corporate governance research, survey 13,461 papers published between 2001 and 2011 in 22 major accounting, economics, finance, law, and management journals; and identify 863 empirical studies in which corporate governance is associated with firm value or other characteristics. We classify the methods used in these studies and assess whether they support a causal link between corporate governance and firm value or another outcome. Only a small minority have convincing causal inference strategies. The convincing strategies largely rely on external shocks – usually from legal rules – to generate natural experiments. We examine the 75 shock-based papers and provide a guide to shock-based research design, which stresses the common features across different designs and the value of using combined designs. http://www.ssrn.com/abstract=1718555
http://www.ssrn.com/1384440.htmlThu, 26 Mar 2015 07:02:11 GMTREVISION: Shock-Based Causal Inference in Corporate Finance and Accounting ResearchWe study shock-based methods for credible causal inference in corporate finance research. We focus on corporate governance research, survey 13,461 papers published between 2001 and 2011 in 22 major accounting, economics, finance, law, and management journals; and identify 863 empirical studies in which corporate governance is associated with firm value or other characteristics. We classify the methods used in these studies and assess whether they support a causal link between corporate governance and firm value or another outcome. Only a small minority have convincing causal inference strategies. The convincing strategies largely rely on external shocks – usually from legal rules – to generate natural experiments. We examine the 75 shock-based papers and provide a guide to shock-based research design, which stresses the common features across different designs and the value of using combined designs. http://www.ssrn.com/abstract=1718555
http://www.ssrn.com/1383875.htmlTue, 24 Mar 2015 12:00:19 GMTREVISION: The Deterrent Effect of Tort Law: Evidence from Medical Malpractice ReformA principal goal of tort law is to deter negligent behavior, but there is little empirical evidence on whether it does so. We study that question for medical malpractice liability, where prior studies have found weak, often null results. We examine whether state adoption of caps on non-economic damages – a central legal reform that reduces liability risk for providers – affects in-hospital patient safety. We use Patient Safety Indicators (PSIs) – measures of adverse events developed by the Agency for Healthcare Research and Quality – as proxies for overall safety. In difference-in-differences analyses of five states that adopt caps on non-economic damages during 2003-2005, we find strong evidence that patient safety gradually falls after the reforms, relative to control states. We also innovate in methodology, using a new, randomization inference-based approach to assess the statistical reliability of our results. http://www.ssrn.com/abstract=2161362
http://www.ssrn.com/1370712.htmlTue, 03 Feb 2015 15:39:21 GMTREVISION: The Effects of 'Early Offers' in Medical Malpractice Cases: Evidence from TexasMedical malpractice litigation is costly and time-consuming. Professor Jeffrey O'Connell, with various coauthors, has long advocated 'early offer' rules that would encourage defendants to offer to settle for economic damages plus attorney fees, and punish plaintiffs who refuse such offers. Using detailed closed claims data from Texas for 1988-2005, we simulate the effects of these 'early offers.'
We find that defendants will normally not make early offers in cases with large economic damages (over $500,000 in 1988 dollars) because doing so will increase payouts. Early offers will normally reduce payouts, and hence will be made, in cases with small economic damages (under $100,000 in 1988 dollars). Defendants may also make offers in cases with moderate ($100,000-500,000) economic damages, depending on case characteristics and the plaintiff’s chances of prevailing.
An early offer program will (i) sharply reduce payouts in cases with small economic damages; (ii) will not materially ... http://www.ssrn.com/abstract=1112135
http://www.ssrn.com/1368897.htmlWed, 28 Jan 2015 08:53:21 GMTREVISION: O’Connell Early Settlement Offers: Toward Realistic Numbers and Two-Sided OffersIn a prior article in this journal, we estimated the effect of an “O’Connell” early settlement offer program on payouts in medical malpractice litigation. Using Texas data and a base set of assumptions, we predicted that early offers would result in a 16% (20%) decline in payouts in currently tried (settled) cases. The overall decline came almost entirely from a sharp drop in payouts in cases with small economic damages. We compared our results with the estimate by Hersch, O’Connell, and Viscusi (2007) (HOV) of a 70% reduction in payouts, reconciled the two estimates, and explained why HOV’s estimate reflected the compound effects of a series of unreasonable assumptions.
In a reply in this journal, Hersch, O’Connell, and Viscusi (2010) (HOV-2) complain that we misunderstand both the early offer proposal and their analysis. Remarkably, they do not dispute our estimates, given our assumptions. In this rebuttal, we defend our assumptions and provide an alternate analysis of ... http://www.ssrn.com/abstract=1503125
http://www.ssrn.com/1368896.htmlWed, 28 Jan 2015 08:50:40 GMTREVISION: Is Delaware Losing Its Cases?Delaware’s expert courts are seen as an integral part of the state’s success in attracting incorporation by public companies. However, the benefit that Delaware companies derive from this expertise depends on whether corporate lawsuits against Delaware companies are brought before the Delaware courts. We report evidence that these suits are increasingly brought outside Delaware. We investigate changes in where suits are brought using four hand-collected datasets capturing different types of suits: class action lawsuits filed in (i) large M&A and (ii) leveraged buyout transactions over 1994-2010; (iii) derivative suits alleging option backdating; and (iv) cases against public company directors that generate one or more publicly available opinions between 1995-2009. We find a secular increase in litigation rates for all companies in large M&A transactions and for Delaware companies in LBO transactions. We also see trends towards (i) suits being filed outside Delaware in both large M&A ... http://www.ssrn.com/abstract=1578404
http://www.ssrn.com/1368894.htmlWed, 28 Jan 2015 08:48:51 GMTREVISION: Can Corporate Governance Reforms Increase Firm Market Values? Event Study Evidence from IndiaA central problem in conducting an event study of the valuation effects of corporate governance reforms is that most reforms affect all firms in a country. Share price changes may reflect the reforms, but could also reflect other information. We address this identification issue by studying India's adoption of major governance reforms (Clause 49). Clause 49 requires, among other things, audit committees, a minimum number of independent directors, and CEO/CFO certification of financial statements and internal controls. The reforms were sponsored by the Confederation of Indian Industry (an organization of large Indian public firms), applied initially to larger firms, and reached smaller public firms only after a several-year lag. The difference in effective dates offers a natural experiment: Large firms are the treatment group for the reforms. Small firms provide a control group for other news affecting India generally. The May 1999 announcement by Indian securities regulators ... http://www.ssrn.com/abstract=914440
http://www.ssrn.com/1368891.htmlWed, 28 Jan 2015 08:38:08 GMTREVISION: Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002Using a comprehensive database of closed claims maintained by the Texas Department of Insurance since 1988, this study provides evidence on a range of issues involving medical malpractice litigation, including claim frequency, payout amounts, defense costs, and jury verdicts. The data present a picture of stability in most aspects and moderate change in others. We do not find evidence in claim outcomes of the medical malpractice insurance crisis that produced headlines over the last several years and led to legal reform in Texas and other states. Controlling for population growth, the number of large paid claims (over $25,000 in real 1988 dollars) was roughly constant from 1990-2002. The number of smaller paid claims declined. Controlling for inflation, payout per large paid claim increased over 1988-2002 by an estimated 0.1 percent insignificant) -0.5 percent (marginally significant) per year, depending on the data set, but actual payouts in tried cases showed little or no time ... http://www.ssrn.com/abstract=770844
http://www.ssrn.com/1368902.htmlWed, 28 Jan 2015 08:27:45 GMTREVISION: The Receding Tide of Medical Malpractice Litigation Part 2: Effect of Damage CapsWe study the effect of damage caps adopted in the 1990s and 2000s on medical malpractice claim rates and payouts. Prior studies found some evidence that caps reduce payout/claim, but mixed and weak evidence on whether caps reduce paid claim rates and payout per physician. However, most prior studies do not allow for the gradual phase-in of damage caps, which usually apply only to lawsuits filed after the reform’s effective date, or only to injuries after the effective date. Once we allow for phase-in, we find strong evidence that damage caps reduce both claim rates and payout per claim, with a large combined impact on payout per physician. The drop in claim rates is concentrated in claims with larger payouts – the ones that would be most affected by a damages cap. Stricter caps have larger effects. Some prior studies also find a large impact of tort reforms other than damage caps. Once we allow for phase-in, we find that these other reforms have no significant impact on either ... http://www.ssrn.com/abstract=2285230
http://www.ssrn.com/1368873.htmlWed, 28 Jan 2015 08:10:20 GMTREVISION: The Receding Tide of Medical Malpractice Litigation Part 1: National TrendsThe U.S. has experienced three medical malpractice (“med mal”) crises in the past forty years. In response, thirty-one states now have caps on non-economic or total damages. Researchers have studied the impact of these caps, relative to control states without caps, but have not studied trends in no-cap states or overall national trends. We find that the per-physician rate of paid med mal claims has been dropping for 20 years and in 2012 is less than half the 1992 level. Lawsuit rates, in the states with available data, are also declining, at similar rates. “Small” paid claims (payout < $50,000 in 2011 dollars) have been dropping for the full period; “large” paid claims (payout > $50,000) have been dropping since 2001. Payout per large paid claim was roughly flat. Payout per physician have been dropping since 2003, and by 2012 were 48% below their 1992 level. The “third wave” of damage cap adoptions over 2003-2006 contributed to this trend, but there are also large declines in ... http://www.ssrn.com/abstract=2109679
http://www.ssrn.com/1368881.htmlWed, 28 Jan 2015 08:08:04 GMTREVISION: Unbundling and Measuring TunnelingManagers and controlling shareholders can extract wealth from firms in many different ways. We develop here a framework for analyzing different types of "tunneling" transactions. We divide tunneling into three broad groups: cash flow, asset, and equity tunneling. We model each type of tunneling as decomposable into a probability of tunneling and a magnitude. We present a simple model of how each type of tunneling affects share prices and financial metrics and provide two detailed case studies -- Gazprom in Russia and Coca-Cola in the United States -- to illustrate how these types of tunneling can occur in both emerging and developed markets. Finally, we explore a number of uses of our decomposition approach -- for empirical research into the nature and extent of tunneling; for asset pricing, especially in high-tunneling-risk environments; for legal regulation of tunneling; and for accounting rules. http://www.ssrn.com/abstract=1030529
http://www.ssrn.com/1367752.htmlSat, 24 Jan 2015 06:35:52 GMTREVISION: Unbundling and Measuring TunnelingManagers and controlling shareholders can extract wealth from firms in many different ways. We develop here a framework for analyzing different types of "tunneling" transactions. We divide tunneling into three broad groups: cash flow, asset, and equity tunneling. We model each type of tunneling as decomposable into a probability of tunneling and a magnitude. We present a simple model of how each type of tunneling affects share prices and financial metrics and provide two detailed case studies -- Gazprom in Russia and Coca-Cola in the United States -- to illustrate how these types of tunneling can occur in both emerging and developed markets. Finally, we explore a number of uses of our decomposition approach -- for empirical research into the nature and extent of tunneling; for asset pricing, especially in high-tunneling-risk environments; for legal regulation of tunneling; and for accounting rules. http://www.ssrn.com/abstract=1030529
http://www.ssrn.com/1363486.htmlThu, 08 Jan 2015 15:47:54 GMTREVISION: Insurance Crisis or Liability Crisis? Medical Malpractice Claiming in Illinois, 1980-2010Four times in the last four decades, Illinois has enacted tort reform limiting medical malpractice (“med mal”) suits – each time in response to complaints about a crisis in med mal premiums. Using a previously unavailable database maintained by the Illinois Department of Insurance, we analyze statewide trends in med mal claiming from 1980-2010, covering three of the four crises. The total direct cost of Illinois’ med mal system has never exceeded 1% of health care spending, and that figure has declined steadily since 1992. Paid claim rates rose sharply from 1980-1985, roughly leveled off from 1986-1993, and then experienced a sustained decline. By 2010, paid claims rates were 75% lower than in the peak year (1991). Mean and median payout per claim has steadily increased since 1980, but these increases are largely attributable to the disappearance of smaller claims involving less severe injuries. We find no evidence that Cook, Madison and St. Clair counties are “judicial ... http://www.ssrn.com/abstract=2462942
http://www.ssrn.com/1361521.htmlSun, 28 Dec 2014 08:31:18 GMTREVISION: The Deterrent Effect of Tort Law: Evidence from Medical Malpractice ReformA principal goal of tort law is to deter negligent behavior, but there is limited empirical evidence on whether it does so. We study that question for medical malpractice liability. We examine whether medical malpractice reforms affect in-hospital patient safety, using Patient Safety Indicators (PSIs) – measures of adverse events developed by the Agency for Healthcare Research and Quality – as proxies for overall safety. In Difference-in-Differences analyses of five states that adopt caps on non-economic damages during 2003-2005, we find consistent evidence that patient safety generally falls after the reforms, compared to control states. http://www.ssrn.com/abstract=2161362
http://www.ssrn.com/1348210.htmlMon, 03 Nov 2014 07:38:50 GMTREVISION: Do Doctors Practice Defensive Medicine, RevisitedDoes tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies find a drop in spending following the adoption of caps on non-economic or total damages (“damage caps”), principally during the 1980s. We re-examine this issue in several ways. First, we study health care spending trends in the nine states that adopted caps during the “third reform wave,” from 2002-2005. Across a variety of difference-in-difference (DiD) methods, damage caps have no significant impact on Medicare Part A (hospital) spending, but lead to 4-5% higher Medicare Part B (physician) spending. Consistent with the DiD analysis, in county fixed effects regressions over 1998-2010, Part B spending is higher in states with lower med mal claim rates. We then revisit the 1980s caps, using stronger covariates. We find no evidence of a post-adoption drop (or rise) in spending for these caps. We conclude that (i) there is no evidence that damage caps reduce overall ... http://www.ssrn.com/abstract=2110656
http://www.ssrn.com/1345226.htmlWed, 22 Oct 2014 12:34:37 GMTREVISION: The Economics of Plaintiff-Side Personal Injury PracticeLittle is known about the economics of plaintiff-side law firms, which typically work on a contingency fee basis. We begin here to fill that gap. We report on the fees received by 124 plaintiff-side personal injury firms located in four states (Illinois, Texas, and two additional undisclosed states), and estimate the impact of various statutory fee caps on those firms. At all of the firms, cases with modest fees may help to keep the lights on, but occasional “blockbuster” cases account for an overwhelming percentage of earned fees. A one-third contingency fee is the most common arrangement, but is not always collected ex post; when recoveries are low, firms often reduce or waive their fee. The estimated effect of caps on contingency fees varies, depending on cap design and the mix of cases a firm handles. But many fee caps dramatically affect the economics of plaintiff-side personal injury practice. http://www.ssrn.com/abstract=1441487
http://www.ssrn.com/1326350.htmlTue, 12 Aug 2014 15:11:13 GMTREVISION: The Deterrent Effect of Tort Law: Evidence from Medical Malpractice ReformA principal goal of tort law is to deter negligent behavior, but there is limited empirical evidence on whether it does so. We study that question for medical malpractice liability. We examine whether medical malpractice reforms affect in-hospital patient safety, using Patient Safety Indicators (PSIs) – measures of adverse events developed by the Agency for Healthcare Research and Quality – as proxies for overall safety. In Difference-in-Differences analyses of five states that adopt caps on non-economic damages during 2003-2005, we find consistent evidence that patient safety generally falls after the reforms, compared to control states. http://www.ssrn.com/abstract=2161362
http://www.ssrn.com/1321133.htmlWed, 23 Jul 2014 06:40:03 GMTREVISION: Do Doctors Practice Defensive Medicine, RevisitedDoes tort reform reduce defensive medicine and thus healthcare spending? Several (though not all) prior studies find a drop in spending following the adoption of caps on non-economic or total damages (“damage caps”), principally during the 1980s. We re-examine this issue in several ways. First, we study health care spending trends in the nine states that adopted caps during the “third reform wave,” from 2002-2005. Across a variety of difference-in-difference (DiD) methods, damage caps have no significant impact on Medicare Part A (hospital) spending, but lead to 4-5% higher Medicare Part B (physician) spending. Consistent with the DiD analysis, in county fixed effects regressions over 1998-2010, Part B spending is higher in states with lower med mal claim rates. We then revisit the 1980s caps, using stronger covariates. We find no evidence of a post-adoption drop (or rise) in spending for these caps. We conclude that (i) there is no evidence that damage caps reduce overall ... http://www.ssrn.com/abstract=2110656
http://www.ssrn.com/1321128.htmlWed, 23 Jul 2014 06:34:23 GMT